Tuesday, December 11, 2012

The Magnitsky Legislation

Quite the saga American businessman Bill Browder has to tell. His experience has been extraordinary in no uncertain terms. And his personal campaign to try to rectify the situation he discovered existing in Russia over a span of ten years' experience operating a well-oiled and remunerative capitalist enterprise has brought gain, discovery, then pain, and now dedication to a cause.

"It was a very effective way of stopping bad things from happening in Russia, but it was also a very effective way of creating a lot of high-placed and high-powered enemies who didn't wish me well."Billions and billions of dollars were being stolen through all sorts of different corrupt schemes."We quickly liquidated all our holdings in Russia in 2006 and evacuated my staff out of Russia so they couldn't steal our money and arrest our people."Then the police, the same police who raided our offices in the first place, raided all of our banks looking for assets to seize. Thankfully, there were no assets there because we had taken all of the money out."We filed fifteen different criminal complaints with regulatory agencies, with law enforcement agencies and with connected politicians, and waited for the SWAT teams and helicopters to fan out and get all the bad guys. It quickly became apparent that there were no good guys in the Russian government. Instead of going out and trying to arrest the people who did this, they opened up criminal cases on all seven of our lawyers on various trumped-up charges."The Russian government completely circled the wagons to cover up the responsibility of everybody. Like Watergate, the crime itself is one thing but what makes this case so politically important internationally, is the high-level cover-up that goes right up to the president of Russia."We haven't been able to get justice inside Russia in any way, shape or form. Everybody who was involved in this -- and there's a huge amount of evidence of them being involved in this --- has been exonerated, some have been promoted and even received state honours."It became clear we would have to seek justice outside Russia."

And that is precisely what American businessman Bill Browder, one-time operator of Hermitage Capital Management until its empty assets were illegally seized by Russian thugs high in the hierarchy of political life in Russia has set about to do. It's not that he lost his financial assets; he was astute enough to recognize what was happening; he was identified as a nuisance and threat to corruption-as-usual and abruptly invited to leave the country, compelling him to withdraw all his assets to safety.

One of his legal operative assets, however, a young Russian lawyer, refused to leave, determined to keep on pursuing the interests of legally bringing wrong-doers to justice. It all started when, in the operation of his capital management enterprise, Mr. Browder soon realized that all the businesses he was doing handling accounts with were virally corrupt. He had done extremely well, capitalized originally at $25-million, his fund swelled to $4.5-billion, the largest foreign portfolio investor in Russia.

And business would have continued to hum along for him had he not decided to exercise ethical scruples and push back against corruption. Bringing him to the grim attention of those whose illegal opportunities he was intent on shutting down. When those who pursued him realized there were no assets to seize they sought other means of extracting funding for their schemes, resulting in a court award to those protected politically by their connections to power, by traducing Mr. Brower's reputation, and claiming the $230-million paid in taxes to the state."They applied for a tax refund of $230-million, which was the largest tax refund in Russian history. They applied for it two days before Christmas - December 23, 2007 - and [it] was awarded and paid out the very next day." That money was shared among corrupt Russian officials, gangsters and oligarchs who enjoyed their profits from other crimes as well, and then sent their wins abroad for safekeeping. These ill-gotten gains enabled them to afford properties abroad, to send their offspring to foreign private schools.

"They like to behave like cannibals at home and then dine at the finest restaurants with white tablecloths in Europe and North America. It hits the Putin regime in the most profound way, because the entire objective of the current leadership of Russia at this stage is to steal money." Vladimir Putin, famously a KGB agent in his earlier incarnation, has in the years since first taking power, brought in his KGB buddies to enable them to share in the hugely profitable game of corrupt management of state affairs.

That lawyer, Sergei Magnitsky who refused to leave Russia, determined to continue pursuing the path to reform was arrested in November 2008 by subordinates of the corrupt officials. He was tortured in an attempt to make him rescind testimony that implicated those same officials. And finally he became ill after months of exposure to torture. "They put him into an isolation cell and eight riot guards with rubber batons beat him for an hour and 8 minutes until he died", at age 37.

"Sergei Magnitsky was tortured to death in order to get him to retract his testimony about the corruption that he uncovered. I made a vow to myself and to his memory that I was going to make sure the people who had done this to him would face justice and his death wouldn't be a meaningless death." And so it is that the Sergei Magnitsky Rule of Law Accountability Act gained final passage through the U.S. Congress. It imposes a visa ban and asset freeze on those "responsible for the detention, abuse or death of Sergei Magnitsky", along with "extrajudicial killings, torture or other gross violations of internationally recognized human rights" in Russia.

And it doesn't stop there. The Parliament of Canada has had an act of its own, similar to the one passed in the United States introduced by former Justice Minister Irwin Cotler. The Magnitsky legislation, Bill C-339 (An Act to condemn corruption and impunity in Russia in the case and death of Sergei Magnitsky) is set to pass in Canada as well.